A Tight Day Ahead For Mortgage Backed Securites and Net Branches

Feb. 26, 2011 - PRLog -- 10:42AM  :  Active Two-Way Market Following Data.
Since the 830am data and more recently, the 10am releases of New Home Sales and FHFA's HPI, the bond market has been highly active and trading in a tight range. Less than 2 bps have separated highs and lows in 10yr yields and FNCL 4.5's have traded between 101-18 and 101-23. If anything, those ranges have been getting tighter since 10am data, suggesting a few things. First, reprice risk is a non-issue in a market this tight. But secondly, that same tightness, combined with the fact that we have the last auction of the week coming up, means are potentially storing some energy for a more pronounced move higher or lower depending on the results. The conclusion is as simple as this: be ready to act, but so far so good.
10:02AM  :  FDIC Helps Consumers Organize and Simplify Finances
Consumers who organize and simplify their financial life can eliminate clutter, save time, reduce stress and save money on fees, interest or other charges. The Winter 2010/2011 issue of FDIC Consumer News, published by the Federal Deposit Insurance Corporation, features tips for streamlining money management. Other timely topics include strategies for getting a small business loan, a warning about new financial frauds on the Internet, an explanation of the unlimited FDIC insurance coverage for noninterest-bearing transaction accounts, options for boosting college savings, and ideas for positioning personal finances for changing interest rates. THIS IS GOOD STUFF TO SHARE WITH BORROWERS!!!
10:01AM  :  DATA: Jan single-family home sales fell 12.6 pct
* JAN SINGLE-FAMILY HOME SALES -12.6 PCT VS DEC +15.7 PCT (PREV +17.5 PCT) * JAN NEW HOME SUPPLY 7.9 MONTHS' WORTH AT CURRENT PACE VS DEC 7.0 MONTHS * HOMES FOR SALE AT END OF JAN 188,000 UNITS, LOWEST SINCE DEC 1967, VS DEC 189,000 UNITS
9:22AM  :  HAMP: House Committee to Vote on Bill to Terminate Program
WASHINGTON, Feb 24 (Reuters) - The U.S. House of Representatives Financial Services Committee has scheduled a vote next week on legislation that would shut down the Obama administration's key housing rescue programs. The panel's Republican leadership said it will consider a bill to terminate the Home Affordable Modification Program, which it said has failed to help a sufficient number of distressed homeowners to justify its cost. It also will vote on bills to shut down a Federal Housing Administration refinancing program and a program to stabilize neighborhoods suffering from heavy foreclosures. "In an era of record-breaking deficits, it's time to pull the plug on these programs that are actually doing more harm than good for struggling homeowners," Financial Services Committee Chairman Spencer Bachus said in a statement. (Reporting by David Lawder;
9:19AM  :  Stock Futures Green. MBS Prices Less Green
S&P futures just went green on the day and MBS prices printed new session lows but remain in positive territory. Stocks are running into technical resistance though so this move may not last much longer. Plus benchmark 10s seem to have found support at 3.46% after profit takers rejected 3.42% for the 2nd time in the recent recovery rally push. We are giving this inflection point much attention to illustrate the bond market's defensive feelings, but do feel, based on the flatter shape of the yield curve, that the rally has more room to run after the auction process is completed at 1pm today. Our next target in 10s is 3.36% if 3.42% is broken. We are looking for the FNCL 4.5 MBS coupon to test 101-28 if that scenario plays out.
9:11AM  :  Chicago Fed National Activity Index: Slowdown in January
The Chicago Fed National Activity Index (CFNAI) is a monthly index designed to gauge overall economic activity and related inflationary pressure. Led by declines in production-related indicators, the Chicago Fed National Activity Index decreased to –0.16 in January from +0.18 in December. Three of the four broad categories of indicators that make up the index made positive contributions in January, but they were offset by continued weakness in the consumption and housing category. The index’s three-month moving average, CFNAI-MA3, edged up to –0.10 in January from –0.14 in December, increasing for the third straight month. January’s CFNAI-MA3 suggests that growth in national economic activity was slightly below its historical trend. With regard to inflation, the amount of economic slack reflected in the CFNAI-MA3 suggests subdued inflationary pressure from economic activity over the coming year. The consumption and housing category’s contribution to the index improved from –0.43 in December to –0.38 in January, the first increase in five months. Housing starts increased to 596,000 annualized units in January from 520,000 in December, while building permits fell to 562,000 annualized units in January from 627,000 in the previous month.
9:05AM  :  Fannie Mae Launches Servicer Accountability Program
Fannie Mae (FNMA/OTC) today announced the Servicer Total Achievement and Rewards (STAR) Program, a new effort designed to measure and evaluate mortgage servicers' performance in supporting the housing recovery by helping homeowners avoid foreclosure. The STAR Program provides clear expectations and specific, consistent measurements to help Fannie Mae servicers increase focus on areas of critical importance to Fannie Mae. The program directly links servicer performance to homeowners the servicer has helped, and the customer's experience with their servicer. "We created the STAR Program to promote transparency, accountability and excellence in mortgage servicing and to recognize those which consistently deliver strong, customer-driven results," said Leslie Peeler, Vice President of Servicing Portfolio Management. "The efforts of servicers are critical to preventing foreclosures and providing homeowners assistance. By creating measurable expectations for our servicers aligned with Fannie Mae's business objectives, we hope to sharpen servicers' focus and encourage them to continue to work with us toward our shared priority: keeping people in their homes." A key component of the STAR Program is the Servicer Performance Scorecard, which provides monthly performance snapshots and trends for key performance indicators to help servicers effectively assess their progress. Top-ranked servicers will be eligible to receive incentive awards and recognition. Rankings of top performers will be made available to the public in an annual scorecard.
9:02AM  :  Rates Tick Higher as Stocks Recover from Overnight Lows
Benchmark interest rates are off their best levels of the day as stock futures attempt a move from their overnight lows following better than anticipated Jobless Claims data and a mixed Durable Goods Orders report. Production MBS coupon prices are holding steady as Treasury yields creep higher, but this relative stability will not last if stock futures make further gains and benchmarks are unable to reverse course. This behavior illustrates the defensive nature of bond traders. There is a clear inclination to book profits at 3.42% in the 10yr note. This is a firm resistance level but it also makes sense that TSYs would weaken ahead of the 1pm $29 billion 7-year note auction.

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